Exploring Cash Balance Plans: A Strategic Retirement Solution for Business Owners 

As a business owner, planning for retirement involves exploring options beyond traditional accounts. Cash Balance Plans offer a robust opportunity to accelerate savings and tax advantages, making them an attractive choice for high-income earners. I’m Ben Payton, CFP®, ChFC®, specializing in retirement income planning at Absaroka Wealth Management. Let’s delve into what Cash Balance Plans entail, how they work, and how they can benefit your retirement strategy. 

What is a Cash Balance Plan? 

A Cash Balance Plan combines features of defined benefit and defined contribution plans. Here’s how it typically operates: 

1. Employer Contributions: Employers make annual contributions to employees’ Cash Balance accounts based on a percentage of their compensation, similar to a defined benefit plan. 
2. Interest Credits: Contributions earn interest credits, usually based on a fixed or variable rate tied to market performance. 
3. Guaranteed Benefits: Employees accumulate benefits over time, with options for a lump sum payout or annuity conversion upon retirement. 

Benefits of Cash Balance Plans for Business Owners 

• Accelerated Savings: Business owners can contribute significantly more than traditional accounts, accelerating retirement savings. 
• Tax Advantages: Contributions are tax-deductible for the business, reducing taxable income, with tax-deferred growth until distribution. 
• Employee Retention: Enhances employee benefits, aiding in recruiting and retaining talent. 

Considerations Before Implementing a Cash Balance Plan 

1. Plan Design: Must comply with IRS regulations on contribution limits and employee benefits. 
2. Financial Commitment: Requires larger, consistent contributions than defined contribution plans, necessitating careful financial planning. 
3. Consultation: Working with a financial advisor like me is crucial for designing a tailored Cash Balance Plan aligned with business and retirement goals. 

How I Can Help 

At Absaroka Wealth Management, I specialize in retirement planning for business owners, providing personalized guidance on Cash Balance Plans. With expertise in tax-efficient strategies and plan design, I help clients maximize retirement savings and optimize tax advantages. 

Take the First Step Towards Optimizing Your Retirement Strategy 

Ready to explore Cash Balance Plans and how they can benefit your business and retirement goals? Schedule a meeting with me, Ben Payton, CFP®, ChFC®, at Absaroka Wealth Management today. I can offer personalized advice and help implement a plan aligned with your financial objectives. 

Don’t wait—call me today at (307) 586-2702 to schedule your consultation or schedule a time below. Let’s work together to build a retirement plan that supports the success of your business. Start planning today for a prosperous tomorrow.